The final decision on a new state lies with the Indian parliament. The state assembly must also pass a resolution approving the creation of the news state.

Correspondents say the timing of the announcement is linked to general elections due early next year. Recent opinion polls have shown that the Congress party is struggling in the state, which has 42 parliamentary seats.

The move to create Telangana has sparked off similar demands in the states of West Bengal and Assam too.